Data Centers in California

The document examines the surge in data center demand in California, driven by generative AI, and warns that without new statewide policies, this growth could increase electricity costs for ratepayers, delay the clean energy transition, and threaten grid reliability. It highlights the risks of fossil-fueled backup generators on local air quality and recommends that data centers pay for their own clean energy generation and grid connection costs.

• California is experiencing a surge in data center demand driven by generative AI, with the California Energy Commission (CEC) projecting an additional 2 GW of electricity load by 2030 and 4 GW by 2040. However, actual demand is uncertain; while PG&E has received applications for 10 GW of load, some evidence suggests these may be overestimated due to speculative requests and grid constraints.
• Existing large data centers in California are highly concentrated, with 17 of the 19 largest facilities located in the San Francisco Bay Area, including 12 clustered within four square miles in San Jose and Santa Clara.
• Data center growth poses three primary risks to the energy system: it may slow the clean energy transition by increasing reliance on gas plants or diverting clean energy from grid decarbonization; it increases local air pollution through the use of diesel-fired backup generators; and it threatens grid reliability due to sensitivity to voltage fluctuations and unpredictable power use from AI training.
• There is a significant risk that electricity ratepayers will bear the costs of data center expansion. Costs can arise from expensive high-voltage transmission connections, market price increases for energy, and the risk of utilities overbuilding infrastructure for projects that never materialize or cease operations.
• PG&E's Rule 30 provides some protections by requiring large load customers to pay upfront for connection costs, but it is limited because it only applies to PG&E's service territory, does not cover broader transmission network upgrades or energy market impacts, and lacks requirements for clean generation.

APA

Specht, M., & Yang, V. (2026). Data Centers in California. Union of Concerned Scientists. https://www.ucs.org/sites/default/files/2026-05/data-centers-in-california.pdf

Chicago

Specht, Mark, and Vivian Yang. Data Centers in California. Union of Concerned Scientists, 2026. https://www.ucs.org/sites/default/files/2026-05/data-centers-in-california.pdf.

Wikipedia

{{cite report |last1=Specht |first1=Mark |last2=Yang |first2=Vivian |title=Data Centers in California |publisher=Union of Concerned Scientists |date=May 2026 |url=https://www.ucs.org/sites/default/files/2026-05/data-centers-in-california.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{specht2026data, author = {Specht, Mark and Yang, Vivian}, title = {{Data Centers in California}}, institution = {Union of Concerned Scientists}, year = {2026}, month = may, url = {https://www.ucs.org/sites/default/files/2026-05/data-centers-in-california.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }